Google has a massive market share which is reflective of it’s huge influence on society. Therefore, naturally, many people have questioned whether Google has been abusing it’s power over the Internet and exploiting Google search engine users for it’s own benefit since it has the potential to quite easily do so. Recently, the European Commission accused Google of breaching antitrust laws (more on this later) which resulted in a large fine for the company. But, this fine was nothing more than a tiny fraction of Google’s total net worth… Nevertheless, it is a step towards taming these large companies and ensuring that they act in order to protect the interests of their consumers.

I’d like to start by explaining what antitrust laws are: they are rules designed to ensure that there is a fair amount of competition in a particular market. In other words, they prevent a single firm being so powerful in a market that other companies are unable to enter the market and provide some healthy rivalry. They also protect consumer welfare which is the well-being of customers.

In terms of internet search engines, I think it’s clear that Google has a huge market share compared to other search engines. Just look at the graph below; it speaks for itself. This clear dominance in the search engine market can cause problems relating to the control of competition and antitrust policies as we’ll soon see.

SEARCHengine.png

The European Commission investigated Google for the past 7 years to check whether Google had violated antitrust laws in Europe. Specifically, they were looking at a possible abuse of power in the domain of online shopping. In short, at the end of the investigation, they came to the decision that yes, Google had breached antitrust laws and were liable to pay a fine of €2.4 billion. This may sound like a huge sum of money to the ordinary person walking on the street, however, it’s hardly anything for Google; it’s simply a drop in the ocean. Nevertheless, ultimately, it’s not about the fine, it’s about stopping Google from acting in an unreasonable manner towards it’s users.

I want to get into some more details about the investigation conducted by the European Commission and what they found so that we can understand how large firms are able to manipulate their customers. It all started with a company called Foundem, an online comparison website, who filed a complaint to the European Commission with regards to the unfair treatment of their website in the Google search engine. Before the complaint was filed, Foundem was doing pretty well with their business – their digital service was attracting a positive response from consumers so they felt as though they were headed on the right track.

However, on the 26th June 2006, something unexpected happened. Foundem experienced a sudden, large decrease in internet traffic, which was unusual for them, to say the least. It was later discovered that ‘changes in Google’ made Foundem jump from 4th to 47th in Google search results. The same was also true of other comparison shopping sites who were all rivals to Google’s own comparison site called Froogle. This lead to even more complaints being filed to the European Commission and an official investigation being launched.

Froogle wasn’t as successful as Foundem, so it’s logical to assume that Google had purposely tried to make Foundem less competitive by moving it lower down in the search results in order to boost Froogle’s traffic. In addition, Google started to turn it’s shopping results, which were found by Froogle, into paid advertisements. This gave Froogle even more attention compared to Foundem, despite the fact that Foundem may have provided a higher quality service.

If one company is obviously better than another company leading to that company reducing competition, this is not a violation of antitrust regulation. Antitrust law is focused on consumer welfare – are companies purposefully acting in a way which harms users? Essentially, Google was intentionally preventing Google search engine users from accessing online services which were in strong rivalry with Google’s own online services – this is an unfair competitive advantage which reduces consumer welfare and disobeys antitrust regulations. Therefore, the European Commission accused Google of breaching it’s antitrust rules.

The European Commission summed it up like this:

“What Google has done is illegal. […] It has denied European consumers the benefits of competition.”

That is exactly what antitrust policy is about, it is about allowing customers to have access to competition in order to increase their welfare. Google clearly didn’t allow their users to have this opportunity, which led to them being penalised. This is certainly a step in the right direction to ensure that large companies don’t deny customers access to goods and services provided by other, rival companies.

For some further details into the investigation carried out by the European Commission, including evidence, consequences of the decision and other cases against Google, check out the official press release on the European Commission’s website. That’s it for now, please share your thoughts in the comments below. Thanks.

GoogleImage

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14 thoughts on “Google’s power may be a problem…

  1. My one wistful thought is this: it was not very many years ago that to conduct a search of the magnitude Google, Bing, et al. provide in seconds would have taken countless hours (days? years?) in documents, libraries and records offices. That such a service is now a multi-billion enterprise we all take for granted is … I don’t what, mind-boogling? (That is not a mis-spelling 🙂 ).

    Liked by 1 person

    1. I guess you’re right, we should be grateful for the fast services that Google and other search engines provide as this quality of product was not available in the past. However, are you suggesting that we should be so grateful that we must allow these search engines, Google in particular, to do whatever they want? Even manipulate their consumers and prevent them from having access to high quality online services which are in competition with the search engine’s services? Oh, and ‘mind-boogling’ is a great phrase!

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    1. I don’t think that James Damore was correct in saying that women just dislike the technology/engineering field due to their ‘biology’; this assumes the existence of gender based preferences when it comes to choosing a profession which I don’t believe to be true.

      However, I also don’t think that he should have been fired due to his remarks as he does have the right to freedom of speech and he should be allowed to express his opinion openly without the fear of being punished.

      Being an British-Indian female, I wouldn’t say that he deeply offended me with his memo, he just stirred up some controversy and a debate which, in my opinion, is a good thing and it should totally be accepted.

      But, the firing of James Damore makes me worry that some tech companies won’t allow their employees to be true to themselves and share their honest views on certain, sensitive subjects. James was certainly brave for talking about diversity and gender in the workplace – in fact, we need to talk about it in order to reach a solution.

      I wonder what you think Steve? Thanks for bringing it up because I’ve been thinking a lot about it!

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      1. I happen to agree with James Damore that there might actually be genuine gender based differences and preferences when choosing a career path and that doesn’t necasarily depend on upbringing or schooling. This is going to be very hard to justify but maybe consider some extreme examples lets say the military (and i mean actual combat units) and as an opposite lets say nursing/care work. Let me also mention medicine which has changed radically in the 35 years that i have been doing it. In that example what was once a very male dominated profession is now rapidly becoming gender balanced and that has been a very good change in this old charge nurse opinion. You might if you knew the history of this kind of thing smile at the thought of me as a nurse which is still quite rare for men to do having a hilarious and productive afternoon’s work with a much younger female senior registrar. In technical terms she is vastly my senior although i ‘run’ the treatment area but we each contribute to the task in hand and that’s a huge change from ‘doctor knows best’. Anyway and back to my loose examples. Are women generally suited to high stress, dangerous and enormously physically demanding situations. There though you might equally argue that only a very few men are capable of that and i would agree except that if we actually looked at the big 5 personality traits eg agreeableness we might find that the statistical difference which is real may suggest that women cluster around the centre on that one and that men generally are shifted to the left of the curve….basically that you might need the psychological trait of less agreeableness to go into combat . The opposite on that one trait is that women because they are statistically more agreeable might tend towards care work and that would be a genuinely valid use of their character traits. IQ is an interesting one also in that women generally cluster towards the centre of the bell curve distribution ie women’s intelligence tends to cluster around the mean whereas in men the statistical tails of the curve are much longer which shows that there are many more less intelligent men around (think of job requirements here) but equally its an actual truth that most of the planets geniuses are men. Its worth a careful read of Damore’s memo to see what he actually said. My opinion is that he might be right in one way but was naive not to realise that what he said would cause the reaction it did in a company that has the values that it does. Google clearly does not have or accept free thinking, free expression and diversity of thought….which is incredibly dangerous for a large company.

        TBC

        Liked by 1 person

    1. Thanks for sharing this article. I admit that Google isn’t a monopoly in its perfect form, but I’d say its much closer than most, if not all, other companies like it. But the article you’ve linked makes some good points which are certainly worth considering.

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  2. And we can always “Click Off.” We are in charge. Until we have no right to use other search engines, Google is cannot become a coercive monopoly. The only way these things ever exist is when government creates them. Free trade, by itself, can never snuff out all competition. Has never happened, absent government say so. This is the rampant fallacy that exists in many countries — and even here in America. We are no longer, have never really been, the land of the free. Perhaps a bit freer than most, but still with a lot of problems.

    Liked by 1 person

  3. Not sure how Google truly relates to its parent company Alphabet, formed in 2015, but my impression was that Alphabet was formed to differentiate various software and services (e.g., YouTube, Chrome, Android, Google Maps, etc.). Doesn’t seem to break Google’s monopolistic stranglehold on search. Further, almost no one refers to Alphabet; all the attention goes to Google, as in “Google owns YouTube,” which is not quite accurate.

    It’s also curious that Google started out with the corporate tagline “Don’t Be Evil” but has since morphed into something no one could have anticipated. It has become the leader in what Shoshana Zuboff calls Surveillance Capitalism, where the service is free (as broadcast TV is still given away) in order to collect data on viewers and deliver their attention to advertisers. See this link:

    http://www.faz.net/-gsf-7twjx

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